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The Democratization of Alternative Investments

March 9, 2022

The Democratization of Alternative Investments

March 9, 2022

The Democratization of Alternative Investments

March 9, 2022 | James Sprow | Blue Vault

Stephanie Drescher of Apollo presented the Keynote for Tuesday’s Alts Week, describing the firm’s globally diversified platform across asset classes. They have over 2,000 employees across 17 offices worldwide. Founded in 1990, Apollo had AUM of $498 billion as of December 31, 2021. They describe their investment approach as Value-Oriented, Contrarian, Rigorous and Tenacious, and Opportunistic Across Market Cycles and Capital Structures.

Apollo thinks about alternative investments as any other investment other than public equity and debt markets. It’s a relatively wide set of categories across the risk/reward spectrum. Three categories of strategies at Apollo are: Yield, Hybrid and Equity. Each element of their platform has different goals regarding return expectations. They purposely have no silos and share information across their platforms to find the most attractive risk/reward opportunities for their investors.

Their clients are looking for a range of expected returns, liquidity, risk profiles, and geographic exposure. Apollo seeks to have excess returns in each category of investment styles.

Apollo’s Flagship Products have meaningfully outperformed their peer benchmarks. Their Athene product, with $213 billion in AUM has provided a 4.5% return in the Yield category compared to 4.2% for peers. The Accord Series has returned a net of 18% compared to 10% for its peers. Hybrid Value has returned a net of 23% compared to the peer benchmark of 20%. Their Flagship Private Equity product has given a 24% net return, above the peer group’s 14% benchmark.

The year 2021 for Apollo was a transformational year for the firm. They hired 400 employees. Stephanie said, “strategy is not enough” and quoted Peter Drucker “Culture eats strategy for breakfast.” People and Culture are at the core of what they do. They take their commitment to each other and to their communities very seriously.

They see the major tailwinds for growth including institutional investors with $102 trillion in alternatives but HNW and Mass-Affluent are 2-5X under-allocated to alternatives. Historically, approximately 5% of the investor base has been comprised of individual investors.

The recent addition of Griffin Capital to Apollo brought 65 distribution professionals and 40 marketing, tech and support professionals. They will be bringing over to Apollo about $5 billion in Interval Fund capital and around 300 unique selling agreements.

They’ve also made investments in Fintech partnerships, including CAIS, iCapital Network, Figure and Motive Partners. They have a commitment to thought leadership and knowledge sharing via Apollo Academy.

There are still many sessions to come during Alts Week 2022.  Register here now!